Amnesty spells trouble for credit industry

[saturnz]

Um actually the representations of the National Credit Regulator have not been favourable to government imposing blanket amnesty. It is not consumer rights groups that are lobbying for a lot of the ideas being bounced in it is the politicians.

I don't know where this blanket amnesty comes from. I sat in Parliament when presentations were made to the PC and Select committee on T&I and thats not the impression I got.

My point around consumer rights groups was that they haven't come out against amnesty, the only groups coming out against it are those who benefit from the current regime. One only needs to look at the issues with regards to unsecured lending, garnishee orders etc to see that the lobbyist have other motives when stating the amnesty will have an adverse affect.

Government and the private sector is corrupt, so I take everything both parties have to say with a huge pinch of salt.

 

[grok]

Ahem .. isn't this sorta thing how the American banking crisis started a few years ago causing world-wide depression?

If not, no worrries, do your thing, carry on.

 

[IzZzy]

Ahem .. isn't this sorta thing how the American banking crisis started a few years ago causing world-wide depression?

If not, no worrries, do your thing, carry on.

That was the culture of lending money without any lending criteria, or without strictly following the criteria. Also the value of the loan often bore no resemblence to the security the bank took.

 

[grok]

That was the culture of lending money without any lending criteria, or without strictly following the criteria. Also the value of the loan often bore no resemblence to the security the bank took.

Sorta similar isn't it? Won't this have a similar effect of opening up credit to non-creditworthy folk by wiping their bad history clean?

 

[IzZzy]

Sorta similar isn't it? Won't this have a similar effect of opening up credit to non-creditworthy folk by wiping their bad history clean?

I suppose so. I think the credit record only serves to indicate (a) your previous behaviour; and (b) based on that, what to price the loan at (or refuse outright). The FED story was based primarily on loans bearing no value to the subject matter of the loan.

So if your credit history doesn't show your previous bad behaviour (but it will show current bad behaviour), it should bring the price of the loan down. What Bank's are saying is that because we won't have that information, we will automatically price higher. I.e. the primary benefit of the legislation will have the opposite effect.